FTSE gains clouded by Provident Financial's 'catastrophic' slump

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* FTSE 100 up 0.7 percent

* Provident Financial down over 60 percent

* Solid results, copper prices support mining shares

* Homebuilder Persimmon hits record high after results

By Danilo Masoni

MILAN, Aug 22 (Reuters) - A fall of more than 60 percent by subprime lender Provident Financial following another profit warning dominated London trading on Tuesday, although the broader market was supported by stronger commodities.

The blue-chip index rose 0.7 percent by 0849 GMT, underpinned by mining shares and gains in almost all stocks. The mid-cap index added 0.5 percent.

BHP Billiton rose 2.9 percent after the world’s largest mining company reported a surge in underlying full-year profits on Tuesday and said it would exit its underperforming U.S. shale oil and gas business.

But Provident Financial tumbled 61 percent after it issued its second profit warning in two months, cancelled its dividend and said that its chief executive was leaving .

“A catastrophic share price drop in a subprime lender – it’s like the last ten years never happened. Is this a Northern Rock moment? Probably not – this is more about management failings than a market-wide issue: rivals are taking market share,” said Neil Wilson, senior market analyst at ETX Capital.

“Management will take a long time to regain credibility. This comes just a couple of months after a profits warning off the back of the disruption of moving to the new operating model,” he said.

Elsewhere, shares in UK homebuilder Persimmon, up 2 percent, touched a record high after it posted a 30 percent rise in first-half profit. (Reporting by Danilo Masoni, editing by Larry King)